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Enforcement Action

Jaclyn Jaeger is an Editor at Compliance Week. She writes on a wide variety of topics, including ethics and compliance, regulatory enforcement matters, risk management, technology, and more. Jaeger welcomes questions and comments from readers; she can be reached via e-mail at jaclyn.jaeger@complianceweek.com.

BioMet said in a filing with the Securities and Exchange Commission last week that the SEC issued the medical device maker a subpoena requiring that the company produce certain documents relating to possible violations of the Foreign Corrupt Practices Act regarding its operations in Brazil and Mexico. More details inside.

Over at the FCPA Professor blog, which celebrated its 5th birthday this week, Professor Mike Koehler offers an important reminder to those who would compare the SEC’s enforcement action in the FCPA area to that of the Department of Justice. Details inside.

The Securities and Exchange Commission has reversed an earlier decision and awarded $400,000 to a whistleblower it had previously denied. The claim was initially dismissed because a self-regulatory organization was already investigating the matter. The whistleblower later persuaded officials that he or she was “engaged in diligent efforts to correct and to bring to light the underlying misconduct in this case.” More inside.

Cubist Pharmaceuticals disclosed this week in a regulatory filing with the Securities and Exchange Commission that it is under investigation by the SEC and Department of Justice for potential violations of the Foreign Corrupt Practices Act concerning a potentially improper payment to a research laboratory and an attempted share grant by Optimer Pharmaceuticals, a biopharmaceutical company that Cubist acquired last year. Details inside.

Layne Christensen announced last week that the Department of Justice has decided not to file any charges against the company in connection with a previously disclosed investigation into potential violations of the Foreign Corrupt Practices Act. The investigation concerned certain payments made in September 2010 to agents and other third parties interacting with government officials in Africa. Details inside.

Sept. 10—Technology company Image Sensing Systems disclosed in a statement this week that the Department of Justice and the Securities and Exchange Commission opted not to bring an enforcement action against it for violating the Foreign Corrupt Practices Act, citing the company’s voluntary disclosure, thorough investigation, cooperation, and voluntary enhancements to its compliance program. “We understand that those efforts have been recognized and that the resolution of the investigation reflects this cooperation,” company Chief Executive Kris Tufto said. Details inside.

Hewlett-Packard Russia pleaded guilty last week and agreed to pay a $58.7 million fine to the Department of Justice for violations of the Foreign Corrupt Practices Act, bringing the total amount of U.S. criminal and civil penalties against H-P and its subsidiaries to more than $108 million. The settlement resolves charges that H-P's subsidiaries in Russia, Poland, and Mexico made improper payments to government officials in these countries to win lucrative public contracts. Details inside.

The Securities and Exchange Commission has given a $30 million award to an informant whose tips led to a major enforcement action. Beyond its size, the award is notable because it is the fourth award to a whistleblower living in a foreign country. The whistleblower’s delay in coming forward limited the amount he or she could receive, but leniency was granted because initial tips would have pre-dated the creation of its bounty program, the SEC added. More inside.

Barclays Capital agreed today to pay a $15 million penalty to the Securities and Exchange Commission for failing to maintain an adequate internal compliance system. As a result, the bank ran afoul of federal securities laws after its U.S. wealth management business acquired the advisory business of Lehman Brothers in 2008. Details inside.

General Cable disclosed this week in a regulatory filing with the Securities and Exchange Commission that it has launched an internal investigation into potential violations of the Foreign Corrupt Practices Act concerning potential improper payments made in Angola, Portugal, Thailand, and India. Details inside.

Global resources company BHP Billiton disclosed in an annual report this week that it’s discussing a possible resolution with the Securities and Exchange Commission to resolve an investigation of potential violations of the Foreign Corrupt Practices Act in connection with the company’s sponsorship of the 2008 Beijing Olympics. Details inside.

Bank of America has agreed to pay a $7.65 million penalty to settle charges of internal accounting control deficiencies and recordkeeping failures. When Bank of America acquired Merrill Lynch in 2008, it assumed a large portfolio of structured notes but failed to deduct any of the realized losses from its required capital buffer. Over time, this caused the bank to overstate its regulatory capital by billions of dollars.

The Securities and Exchange Commission this week brought an enforcement action against a former Wells Fargo Advisors compliance officer for allegedly altering a document before it was provided to the SEC during an investigation. The compliance officer was responsible for identifying potentially suspicious trading by Wells Fargo personnel, or the firm’s customers and clients, and then analyzing whether the trades may have been based on material nonpublic information. Details inside.

The Securities and Exchange Commission has charged Bio-Rad Laboratories, a life sciences research company, with violating the Foreign Corrupt Practices Act when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand to win business. The company, which self-reported the misconduct, agreed to pay $55 million to settle charges. More inside.

A corruption probe unfolding against Brazilian state-owned oil company Petrobras took an interesting turn today, when Brazilian federal police carried out a series of raids that resulted in the arrests of eighteen individuals believed to be involved in a widespread money-laundering scheme. In light of the accusations and investigations, Petrobas said, it will need to delay the filing of its third quarter 2014 financial statements. Details inside.

Fiscal year 2014 marked a historic year for the Securities and Exchange Commission’s whistleblower program both in the number of tips it received and the number and dollar amount of whistleblower rewards the agency doled out, according to the SEC’s annual report to Congress. The SEC received 3,620 whistleblower tips in 2014, compared to 3,238 last year, notes the report. More on the program inside.

Scientific instruments manufacturer Bruker will pay a $2.4 million penalty to the Securities and Exchange Commission to resolve charges of violating the Foreign Corrupt Practices Act by providing non-business related travel and improper payments to various Chinese government officials in an effort to win business. Details inside.

Foreign Corrupt Practices Act enforcement actions brought by the Justice Department and the Securities Exchange Commission in 2014 held steady in comparison to the previous year's enforcement numbers, while the average price tag in penalty amounts continued to skyrocket. In 2014, the average total value of monetary resolutions in FCPA enforcement actions reached $156.6 million, in comparison to $80 million in 2013. Details inside.

The Securities and Exchange Commission this week charged a UBS subsidiary with disclosure failures and other securities law violations related to the operation and marketing of its dark pool. UBS Securities agreed to pay more than $14.4 million, including a $12 million penalty—the SEC’s largest against an alternative trading system. Details inside.

Standards & Poor’s Ratings Services has agreed to pay $58 million to the SEC, $12 million to the New York Attorney General’s Office, and $7 million to the Massachusetts Attorney General’s Office to settle a series of federal securities law violations involving fraudulent misconduct in its ratings of certain commercial mortgage-backed securities.

BNY Mellon disclosed in a Form 8-K filing with the SEC last week that certain of its current and former employees have received Wells notices for potential violations of the Foreign Corrupt Practices Act. BNY Mellon said it received a similar Wells notice in the fourth quarter of 2014. Details inside.

The Financial Crimes Enforcement Network and the SEC today slapped securities broker Oppenheimer with a $20 million penalty for not adhering to rules on the sale of penny stocks. Of that amount, $10 million will go to the SEC to resolve related securities and Bank Secrecy Act violations. Details inside.

Cobalt International Energy announced yesterday that it has received a termination letter from the Securities and Exchange Commission, stating that the agency does not intend to recommend any enforcement action after looking into potential violations of federal securities laws related to Cobalt's operations in Angola. “This formally concludes the SEC’s investigation,” the company stated. Details inside.